Dynamic competitive models of industry evolution suggest that firm profit will be more volatile and turnover will be lower in industries with higher sunk costs. These implications are consistent with empirical observation.

Adelina Gschwandtner

Val E. Lambson

English

Research Papers in Economics

Competitive Profits in the Long Run,&quot;

Entry and Exit

Entry and Exit Decisions Under Uncertainty,&quot;

Entry, Exit and Firm Dynamics in Long Run Equilibrium,

Financial Distress and Corporate Performance”,

Industry Evolution with Sunk Costs and Uncertain Market Conditions,&quot;

Innovation and Industry Evolution,&quot;

Patterns of Firm Entry and Exit in U.S. Manufacturing Industries,&quot; The Rand

Sunk Costs and Firm Value Variability: Theory and Evidence,&quot;

Sunk Costs and the Variability of Firm Value Over Time,&quot;

The Growth and Failure of U.S. Manufacturing Plants,&quot;

Sunk costs, Profit Volatility, and Turnover

http://homepage.univie.ac.at/Papers.Econ/RePEc/vie/viennp/vie0405.pdf

Sunk costs, Profit Volatility, and Turnover

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Research Papers in Economics